Having a method for recording your income is likely one of the main reasons you purchased your QuickBooks program. Here are
just some of the reasons why it’s important to have an accurate record of your income transactions.

You need to be able to track your company’s revenue and record income transactions so you know how well your company is performing.

You need a vehicle whereby you can separate your income into appropriate accounts so that you can produce reliable financial
statements that tell you where your company’s strengths and weaknesses are.

You need the record-keeping ability necessary to provide your customers with an opportunity to make down payments and partial
payments, as well as being able to give them the right to receive refunds and credits for returned merchandise or unfulfilled
obligations.

You need to have the mechanism in place for recording amounts you deposit in your bank account.

In this day and age, you need to be able to email an invoice to customers.

If you incur expenses on behalf of a customer, you need to be able to charge those expenses to your customer.

You need to be able to assess finance charges for late payments.

All of this and more can be accomplished through the invoicing and collection services available in your QuickBooks program.
This chapter explains how you can meet all your revenue-collection obligations.

Setting Sales and Customers Preferences

You can customize some of the standard features that apply to invoices by making adjustments in the Sales & Customers preferences
screen. The types of preferences that relate to your sales operations include setting a default shipping method, setting a
standard markup percent for items you purchase and resell to customers, and indicating a standard FOB for your company. In
addition, you indicate how you want reimbursements to be recorded in your financial records, in what order customer payments
are to be applied to outstanding invoices, whether you want to be told you are about to issue a duplicate invoice number,
and whether you want to use the QuickBooks Price Level feature. The QuickBooks Price Level feature enables you to easily apply
discounts or price increases to items on your invoices. The settings you make here affect all your company’s invoices. Note
that only a user with administrative rights can make changes to the company preferences for sales and customers.

Indicate the most common shipping method that your company uses in the Usual Shipping Method field.

Indicate the status that applies to your sales in the Usual FOB field.

Check the Warn About Duplicate Invoice Numbers checkbox if you want to receive a warning when you are about to issue an invoice with a number that duplicates another invoice.

Check Track Reimbursed Expenses as Income if you have expenditures that will be recorded as income rather than an offset to the expense account.

Enter a Default Markup Percentage that is to be used for standard markups on items your company buys and resells to customers.

Did You Know?

FOB stands for Free on Board. FOB refers to the physical place where the ownership of an item changes hands from the vendor to the purchaser. This designation
is used when discussing shipping costs and is important for determining who has the responsibility of shipping and insurance
costs. “FOB Our Warehouse” for example, means the ownership of the item transfers to the purchaser when it leaves the seller’s
warehouse. The purchaser is responsible for shipping charges and insurance on the item from the time it leaves the seller’s
premises.

Check Use Price Levels to use the QuickBooks Price Levels feature for quickly adjusting amounts on sales forms by a preset percentage.

Check Enable Sales Orders if you want to use the sales orders feature in QuickBooks. If you check this box, then you have the option of checking the
box to warn about duplicate sales order numbers and to prevent the printing of zero amounts.

Choose the template you prefer to use for invoice packing slips.

If you have enabled sales orders, choose the templates you prefer to use for sales order packing slips and sales order pick
lists.

Check Automatically Calculate Payments if you want to automatically calculate the amount of payments you received based on the invoices you check off on the Receive
Payments list.

Check Use Undeposited Funds As a Default Deposit to Account to designate your undeposited funds account as the default account when recording payments that you receive.

Click OK.

Did You Know?

You can change preference settings on invoice forms. The settings you make in the Sales & Customers Preferences dialog box affect all of your company’s invoices. However, you
can override these settings, if necessary, on the actual invoices.

See Also

See the various tasks about customizing forms in Chapter 10 for information on creating your own forms that can be used as
templates.

Accounting for Sales

The goods and services your company sells produce income that needs to be recorded in your company’s financial records.

When you issue an invoice, QuickBooks increases your income by the amount on that invoice. If the customer is to pay you in
the future, your company’s accounts receivable account is also increased by the amount of the invoice. Alternatively, if you
receive cash at the time of the sale, the undeposited funds account is increased.

If the sale is taxable, your sales tax liability account is increased by the amount of sales tax charged on the invoice.

The following example illustrates the accounts that are affected in the background when you enter information on a QuickBooks
invoice form: